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Misuse of Public Funds

Public Funds may not be Used for Personal Purposes

The starting point for any analysis concerning the misuse of public funds begins with the principle that public funds must be expended for an authorized public purpose. An expenditure is made for a public purpose when its purpose is to benefit the public interest rather than private individuals or private purposes.

Once a public purpose is established, the expenditure must still be authorized. A public official possesses only those powers that are conferred by law, either expressly or impliedly.

The California Constitution and a variety of state statutes make it clear that public funds may not be expended for purposes that are primarily personal. Such expenditures are neither for a public purpose nor are they authorized.

The prohibition against using public funds for personal purposes does not mean that no personal benefit may result from an expenditure of public funds.

For example, the payment of a public employee’s salary confers a personal benefit on the employee, but it is an appropriate expenditure of public funds because it is procuring the services of the employee for public purposes.

The misuse of public funds occurs when the personal benefit conferred by a public expenditure is not merely incidental. The term “public funds” is not limited to money, but includes anything of value belonging to a public agency such as equipment, supplies, compensated staff time, and use of telephones, computers, and fax machines and other equipment and resources.

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Examples of Misuse of Public Funds

  1. In People v. Dillon, a city commissioner used official government discounts to purchase items for himself and others. This was a misuse of public funds, even though those receiving the discount paid for the items with personal funds.
  2. In People v. Sperl, a county marshal furnished a deputy marshal and a county vehicle to transport a political candidate, his staff and family.
  3. In People v. Battin, a county supervisor used his county compensated staff to work on his political campaign for Lieutenant Governor.
  4. In People v. Harby, a city official used a city car, entrusted to him for use in connection with official business, to take a pleasure trip from Los Angeles to Great Falls, Montana and back.

Violations of the laws prohibiting misuse of public funds may subject the violator to criminal and civil sanctions.

These penalties may include imprisonment for up to four years and a bar from holding office.

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State Agency Participation in Ballot Measure Elections

There is another issue involving the misuse of public funds that does not concern the personal use of public funds. This issue concerns the use of public funds in connection with ballot measure campaigns. Following is a list of what we’ll cover in this section.

  • Stanson v. Mott
  • Endorsements and Informational Materials
  • Improperly Using Public Funds may Trigger Fines

Using Public Funds and Ballot Measure Campaigns

The California Supreme Court case of Stanson v. Mott is the cornerstone case concerning the expenditure of public funds in election campaigns.

In Stanson v. Mott, a private citizen sued the Director of the California Department of Parks and Recreation, challenging the director’s expenditure of Department funds to support passage of a bond act appearing on a statewide ballot. The Supreme Court unanimously found that the director had acted unlawfully, concluding that “in the absence of clear and explicit legislative authorization, a public agency may not expend public funds to promote a partisan position in an election campaign.”

Stanson v. Mott

The Supreme Court wrote in Stanson: “A fundamental precept of this nation’s democratic electoral process is that the government may not ‘take sides’ in election contests or bestow an unfair advantage on one of several competing factions. A principal danger feared by our country’s founders lay in the possibility that the holders of governmental authority would use official power improperly to perpetuate themselves, or their allies, in office....”

The Supreme Court further wrote in Stanson “...The selective use of public funds in election campaigns, of course, raises the specter of just such an improper distortion of the democratic electoral process.”

Endorsements and Informational Materials: Subsequently, court cases have said that a government agency may endorse a measure that is related to its expertise so long as it does not expend funds to promote its passage.

Similarly, a government agency may draft legislation or a ballot measure related to its expertise, but may not promote the passage of the measure in an election campaign.

Here is Jose Lopez discussing the findings in the Stanson case in regard to the agency participation in ballot measure elections.

  1. “The Stanson Court also noted that if a state agency or department has authority to disseminate information relating to its activities, it may spend funds to provide the public with a fair presentation of relevant information.”

  2. “The Court found that it would be contrary to the public interest to bar knowledgeable public agencies from disclosing relevant information to the public, so long as such disclosure is full and impartial and does not amount to improper campaign activity.”

  3. “To be fair, a presentation must consider all important points and provide equal treatment to both sides of the issue.”

Improperly Using Public Funds may Trigger Fines: Improper use of public funds also may trigger fines from the Fair Political Practices Commission for failing to report campaign contributions. In 1996, Sacramento County paid a $10,000 fine to the Commission in connection with a utility bill insert explaining the effect on the county of several ballot measures. The Commission ruled that the insert advocated a position on the ballot measures and was not a neutral and fair presentation of the facts.

Let's Review

Question: TRUE or FALSE: An expenditure of government funds is legally sufficient if it benefits the public.

Answer: False. Even if an expenditure of government funds benefits the public, it is not legally permissible unless it is authorized by law.

Let's Review

Question: Evelyn is an agency secretary. She has just completed a long day and she wishes to make a few telephone calls before she leaves her office to invite potential contributors to the incumbent Governor’s campaign fundraising dinner. Since the people she will be calling frequently have dealings with the state government on a variety of issues, may she charge these calls to the state? Yes or No.

Answer: No. Evelyn may not charge the calls to the state as they are for personal political purposes rather than for a public purpose.

Let's Review

Question: Ramon is the director of a state department. He wishes to produce informational materials to answer questions about the impact of a ballot measure. Select the situation in which it is permissible to expend funds for this purpose.

  1. The materials stop short of advocating a vote for or against the measure.
  2. The materials do not make false statements.
  3. The materials present a balanced description of the favorable and unfavorable impacts of the measure.

Answer: c. The materials must present a balanced description of the favorable and unfavorable impacts of the measure.

Remember These Points

  • Expenditures must be for a public purpose
  • Expenditures must be authorized
  • Public funds may not be expended for personal use
  • Information must be fairly presented
  • Violations bring criminal, civil and administrative sanctions

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You have completed the "Misuse of Public Funds" module. The next module is Other Laws.

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